The Power Ministry has proposed a single stage two-part bidding process, consisting of technical and financial bidding stages, for procuring storage capacity from pumped storage projects (PSPs).

Earlier this week, the Ministry released the draft tariff-based competitive bidding (TBCB) guidelines for procuring storage space from PSPs. It has sought responses from stakeholders on the draft norms, which can be shared by the first week of September 2024.

On the rationale behind the focus on energy storage systems (ESS), the Ministry said the challenge lies in the variability of RE due to factors such as time, climate, season and location.

Renewable sources such as solar, wind, and run-of-the-river hydro are not available 24x7, posing grid balancing challenges. ESS addresses this by storing excess energy and supplying it when needed, improving grid stability, enabling peak shifting and enhancing renewable energy integration, it added.

The Ministry has already issued guidelines for procurement and utilisation of Battery Energy Storage Systems (BESS).

The National Electricity Plan 2023 foresees a need for around 74 gigawatts (GW) or 411 GW hour (GWh) of ESS by FY32, including 27 GW/ 175 GWh from PSP and 47 GW/ 236 GWh from BESS.

Procurement modes

The Ministry has suggested two modes for procurement of storage capacity from PSPs.

In the first mode, the procurer can choose to locate the project at a site pre-specified in the bidding documents. In case, the site belongs to the government or a government entity, the development shall be on a Build Own Operate Transfer (BOOT) basis for a period of 25 to 40 years, which shall be specified in the request for selection (RfS) document.

In BOOT mode of implementation, the project will be transferred after the end of term of the agreement to the entity identified by the State government at a pre specified amount to be specified in the RfS.

Under the second mode, the supply will be from a PSP developed on a site self-identified by the bidder or from an existing commissioned PSP. In this case the development may be on Finance Own Operate (FOO) basis for a period of 15 to 25 years, which shall be specified in the RfS.

PSP Developers can self-identify potential sites where a PSP can be constructed or offer storage from already commissioned projects.

Bid capacity

“For Inter-State Transmission System (ISTS) connected projects, the minimum bid capacity that can be offered by the bidder should be 50 megawatts (MW),” the draft guidelines said.

On the other hand, For Intra State Transmission System (InSTS) connected projects, the minimum bid capacity may be at least 10 MW, it added.

For projects in North-Eastern States, Special Category States, and other InSTS-connected projects, based on the availability of land and transmission facilities, a smaller minimum capacity may be allowed but this should be specified beforehand in the RfS.